Universal Music Gets A New CEO... Who Thinks CDs Are The Future

from the wow dept

What's up with Vivendi? We're still amazed that the French conglomerate that own Universal Music didn't step up and fire CEO Doug Morris back in 2007 when he came out and confessed that not only was he clueless about the most important change in the music business (the rise of digital), but that he was too clueless to even know how to hire people who could help:

"There's no one in the record company that's a technologist," Morris explains. "That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

Personally, I would hire a vet. But to Morris, even that wasn't an option. "We didn't know who to hire," he says, becoming more agitated. "I wouldn't be able to recognize a good technology person -- anyone with a good bullshit story would have gotten past me." Morris' almost willful cluelessness is telling. "He wasn't prepared for a business that was going to be so totally disrupted by technology," says a longtime industry insider who has worked with Morris. "He just doesn't have that kind of mind."

How does any board of directors let that person stay in place as CEO, in charge of guiding the largest music label in the world into the modern era, when that CEO admits he's so clueless on the most important thing impacting the industry that he doesn't even know who to turn to to help?

Well, now, it looks like Universal is finally getting a new CEO -- but not because Morris has finally been given the boot -- he's still sticking around and gradually easing out of his role as he "mentors" incoming CEO Lucian Grainge, who has headed the company's international division until now. So, what's Grainge's take on the future?

"I believe that the CD will out-survive me as a format," Mr. Grainge said in an interview.

Yeah, good luck with that. Between you and Warner Music opting-out of online streaming services, it's as if the major record labels are simply trying to accelerate their own demise. Have they taken out life insurance policies on themselves? In the meantime, Vivendi, who's watching over Universal Music these days?

Re: Re:

This is a good example...

...of why the corporate world has been due for a change in how they structure control in their hierarchy architecture. When a corporation has a Board that the President/CEO must answer to, then changes in the "leadership" provided by that Prez/CEO position are meaningless.

To turn a type of Animal Farm-ish analogy, it'd be like if you had a corporate board filled with pigs that hired another pig to be their CEO.

"What are we going to do?" asks a company lackey (probably a chicken).

"Slops!" screams President Porky Pig. "We're going to provision slops so we can gord ourselves on them!"

Twenty years later, slops are hard to come by, and the pigs are starving. Since Porky only knows provisioning slops, the board decides it's time for a change. Obviously, they need to go with another food source, so they should hire someone else. In this case, they promote Bugs Bunny, and the board asks for his plans.

"Well, I think carrots are a better way to go," Bugs says.

The chairman of the board looks at him confused and says, "You can make slops from carrots?"

"No," Bugs says. "You eat the carrots."

"And then do you poop out slops to eat from the carrots?" Chairman asks.

"No, you just eat them," Bugs responds.

"But what about slops?" The board chorruses.

"No more slops," Bugs says.

"Nonsense! Make me slops!" The board screams, and then fires Bugs and puts Porky's son in as Prez....

yes unniversal is right

why? cause they can and are ripping off canadians for a cdr levy and not paying artists.
hey i know an idea lets make it so no one can download via UUB and caps and laws like ACTA treaties and hehe go and charge them 29.95 for a 20 cent piece a plastic.

yes you too can join in and demand to rip off people
we need to apply copyright to all tools and services so YOU TOO can be lazy and sit on the beach and or enjoy a yacht building program

Maybe

""I believe that the CD will out-survive me as a format," Mr. Grainge said in an interview. ""

Well, perhaps he expects to be ousted soon?

But, strictly speaking, CDs may well outsurvive him as a format. But, then, strictly speaking, you can still buy vinyl records. The question is whether he thinks CD will be the *primary* format, or a secondary format.

Re: This guy's not doing it right.

Maybe he means that the plastic will be around forever while his body is biodegradable, and thus the plastic discs are worth more because of this. Even if this is the truth, I don't see this as a compelling sales point. People want to care around less stuff and they want fewer plastics in the environment.

*Sigh*

It's like they want to fail. Seriously, how can the record labels continue to be this dumb? I just don't get it.

We have moved on. It is time for them to acknowledge this fact and do the same. There will more than likely always be a market for physical media - I do not dispute this, but the days of old in which physical media sales dominated are long gone.

UMG technology

In fact UMG is stacked with technology experts; they participate in all the interesting technology fora relating to sharing, publishing, selling, DRM, storage etc. Not sure where you got your quotation from but either it's a bogus quote or the ex-CEO was BSing and you ate it up. BTW I'm a long time TD reader so don't take this badly... I mostly agree with much of the ranting that goes on here :)
Here's a long timer though I believe he moved to Sony Pictures recently: http://en.wikipedia.org/wiki/Albhy_Galuten

Re: UMG technology

Are you really a long time reader? If you were, you should remember this story. The other zinger of a quote was "If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? There you go. That's what happened to the record business." I guess he has not heard of bottled water. Here is Mike's original report on the story: http://www.techdirt.com/articles/20071127/011720.shtml

I don't think he believes it, but he's just trying to say something positive to reassure investors.

Wizard's First Rule and all that. People will believe a lie just because they want it to be true. He's hoping his investors are stupid enough to believe against all hope that the good times are returning.

Who would invest in a industry powerhouse when the leaders predict chaos and a turbulent market where any upstart could potentially put them out of business.

Braaaiinnnsss

Maybe

Actually, he might be right. Lots of people still want physical objects (LP's have actually made a bit of a comeback). Where he's wrong is the notion that there will be a significant market for them.

Too bad nobody decided on a standard format with a higher resolution (e.g. 24bit/96KHz), because that's the only audio advantage CD's have over compressed files. If the majors hadn't been bickering over formats, they might have had something that could appeal to audiophiles, and in a few years audiophiles are going to be the only ones who buy physical music at all.

It goes to show that major labels have never had a good business model. They've missed the boat so many times, I'm surprised they didn't fold twenty years ago.

Re: Maybe

They didn't fold 20 years ago because they were the gatekeepers to the rest of the world. That's no longer true, or at least it's beginning not to be true as more and more artists find a niche for themselves on the interwebz.

There's a Ghostbusters Keymaster/Gatekeeper joke in here somewhere but I can't seem to find it.

Re: Maybe

There's still not really any point in CDs as increased storage space/bandwidth continues to push bit rates up. Eventually, it may be standard to have the entire history of uncompressed music on a single portable or easily-accessed hard drive(or just streamed from the internet), so I don't see physical media ever becoming more relevant again.

Re: Re: Maybe

While digital is a more efficient way to distribute music, CDs are still a good 'thing' to buy/sell. I have purchased music online where I am given an instant download link, and a physical CD is shipped to me later. I don't think I've ever actually inserted that CD into a player, I'm fine with the FLACs they sent me, but it's nice to have a 'real thing' that I can hold in my hands, even if it is purely psychological.

Giving out free digital music, and selling liner notes without a CD to support the music just seems weird.

Even the audiophiles

Yes, even the audiophiles have moved on. FLAC or ALAC is fine, but the reality is that even us audiophiles put high rate VBR AAC on our phones. We have lossless hooked up to the monitors. We find ways to buy lossless audio. In the end, it's not how perfect the diamond is, but rather does it sparkle? I can download shiny stuff just fine, thanks. CDs are for data, sometimes, not music.

Sad Predictions

As a former employee at Universal, it's sad to see such cluelessness. I highly appreciate my employment experience with Universal, but I must say that keeping someone in the position of CEO that is not only clueless about the changing landscape of the music industry but also dumbfounded in taking the steps necessary to hire the right people to assist in this transition also reflects badly on the board of directors at Vivendi.

Clearly someone needs to read Good To Great by Jim Collins. I do respect Universal and their ongoing success in the entertainment industry. I just can't seem to wrap my head around these poor choices. They have an incredible platform they can continue capitalizing on, but unless the right decisions are made they will continue losing market share.

As a side note Mr Grainge, the CD will not out survive you as a format. It's a nice though, but it's just not probable. The cd will continue selling for some time that's for sure, but it will eventually bow to the digital format.

Sad Predictions

As a former employee at Universal, it's sad to see such cluelessness. I highly appreciate my employment experience with Universal, but I must say that keeping someone in the position of CEO that is not only clueless about the changing landscape of the music industry but also dumbfounded in taking the steps necessary to hire the right people to assist in this transition also reflects badly on the board of directors at Vivendi.

Clearly someone needs to read Good To Great by Jim Collins. I do respect Universal and their ongoing success in the entertainment industry. I just can't seem to wrap my head around these poor choices. They have an incredible platform they can continue capitalizing on, but unless the right decisions are made they will continue losing market share.

As a side note Mr Grainge, the CD will not out survive you as a format. It's a nice though, but it's just not probable. The cd will continue selling for some time that's for sure, but it will eventually bow to the digital format.

Re:

Or try the Flattr thingy, this one is new, you put credits on your account, effectively telling them how much you want to spend per month and everything you click inside will get a piece of that money or at least this is what I understood about the business model the funny part is it came from one of the founders of the Pirate Bay, if this takes off some people will cry hard at night.

Funny. When I walked into the CD section today at a local Target, I commented to my wife how small it was and the narrow selection. I stated it's only time before CD sections are eliminated in department stores.

I can't believe that Best Buy and Future Shop still have prominent CD sections. I rarely see anyone in those sections. How much revenue could they be generating to justify their existence?

Re: Boycott

I'm halfway with you, but I really wish you would go the rest of the way. Yes, avoid purchasing the stuff from these companies. I have for over 10 years!

But don't pirate. Here's why: you're still creating a demand, and you aren't hurting the companies as badly as you could be. Because you're acting as an advertising agent, you are reducing the impact of your boycott.

Instead of that, simply don't listen to/watch their stuff at all! Get the stuff from artists who are not affiliated with the bad guys. Pay them, even when they don't require payment.

This is how to hurt the big entertainment companies -- ignore them and reward those who are doing things the right way.

I agree that both quotes make the co-CEOs sound ridiculous and ill-prepared for the future. However, I find it amusing that not one person has provided a solution. It's easy to point out failure, but much harder to go out on the ledge and say this is what needs to be done and here's why it will work.

Boycotting would work, except for the fact that 90% of the top downloads/physical sales come from a major label. Even indie labels, like Sub Pop, receive a huge portion of funding from majors. Without this funding, many will cease to exist as well. So if you only want to listen to that 10%, go right ahead. When labels do go belly up, virtually all quality music will dry up. No good songs on the radio, no good songs to download (legally or illegally online).

In the meantime, as a music fan, I think the better path is to find a solution that embraces digital but also provides a reliable cash stream.

John Fenderson- I have a feeling that your definition of good music and mine are very different. If you don't mind, name me 5 of your favorite artists in the current Billboard Top 200 that are on an indie label, which is not affiliated with a major. Or name me 5 indie artists who are on a top 40, urban, pop, or alternative station that aren't on a major or on an major affiliated-indie.

I listen to about 30 unsigned artists per day and go to 5 shows/week on a slow week. While I agree there are plenty of good unsigned bands out there, very few of them are great on their own. Most only appeal to niche markets rather than larger markets. Hence, there's not enough radio-ready material out there without further development. Look at the fact that very few artist manage to get radio play and blow up w/o any label help, be it an indie or major.

Both indies and majors serve very useful purposes of pairing artists with the best writers, producers, mixers, engineers, etc., and sometimes giving them the financial resources to do this also. Very few acts are at the level where they don't need to work with outside writers or producers. Even Michael Jackson needed Quincy Jones and the world is much better off for it. Thus, the sum is greater than its parts, and as a music fan, I love that it helps a bunch of creative minds come together to make something classic.

You probably wouldn't want to see a movie w/ just one guy with his camera, right? Instead, I bet you'd want him to work with writers, a producer, a director, actors, music supervisors, and a studio who writes the check and makes it all possible. Like movies, videogames or any entertainment industry, music is a collaborative process. I don't think the public at large appreciates a one-man show the way you do.

But please, go ahead and list some great songs out there on the billboard charts or on regular rotation at radio that aren't label affiliated.

Re: Re:

(to continue)
ie: the corporate passed laws over public airwaves and the artificial lack of competition on public airwaves and the fact that a hand full of people get unowed exclusive privileges to broadcast on those public airwaves because those people are the ones that bribe the government the most (ie: the highest bidder gets exclusive rights to broadcast on public airwaves. You know what that's called? Bribery, and it's LEGALIZED bribery even).

"Look at the fact that very few artist manage to get radio play and blow up w/o any label help, be it an indie or major."

Much of this is because the broken laws are such that a hand full of people own exclusive privileges to use many of the public airwaves which has made it much easier for a hand full of people to game the system in a way that ensures that everything that's easily available to the public is only available at monopoly prices. The same is true for cableco infrastructure, the government has taken away our rights to build new infrastructure granting a small group of people exclusive privileges over those rights.

Back in the early days of public airwaves public airwaves were much like a communication medium. They provided so much public utility that it would create a huge backlash for the government to take the right to broadcast on them from the public and grant exclusive privileges to the top one percent all at once. (it's like if you put a frog in boiling water all at once, it jumps out. You put it in warm water and slowly heat it, it eventually boils to death). So what did they do? They first started to regulate it under the fake pretext that it's for the best interest of the public by ensuring that there was a certain amount of competition. Eventually they kept on reducing the required amount of competition until eventually the government granted completely took away our rights to use public airwaves and granted evil rich people exclusive unowed privileges over those airwaves.

The solution? Disbar the FCC and allow the public to use public airwaves however the free market would allow.

First of all, as a two way communication medium (and not a braodcasting medium) you can get twice the data flow per bandwidth.

Secondly, it would create an influx of new technologies, like WiFi, that people can use to create networks of information transfer.

Thirdly, it would ensure that more information that gets transmitted in any given local area was more relevant to the people demanding it. You wouldn't have one broadcast station that served everywhere, that's inefficient, you would have multiple different people broadcasting different things in different areas which would reduce unnecessary redundancy.

It's like how the cell phone system is broken down into many many cells. If you had just one huge cell that everyone had to share the same bandwidth on, it would be terribly inefficient, no one would be able to get nearly as much bandwidth. But if you get to divide the areas into smaller regions and have a system where people can request what information they specifically want in their small specific area you can a MUCH MUCH larger selection of radio stations and much more information flow as a whole (since you now utilize two way communication in more areas for one thing).

For instance, a good system would be to have one small band that broadcasted every station/URL that was playing and on what frequency it was playing on in a specific area. Now, if I request station X and it's playing in my specific local area (perhaps the local area can be, say, anything within a mile of me or perhaps the cells can be divided into blocks of a mile) my tuner would just tune into that station. If I were to request a URL that wasn't playing in my area and there was free bandwidth in my area, the tuner would then broadcast what I wanted to play in my area and list it. Anyone else who asks for that same URL can listen to that same station.

and this is completely feasible. If cell phones can service so many people in the same area, both with Internet and voice, especially given the extremely small amount of bandwidth they require (as compared to how much goes into television and radio already, ESPECIALLY television which is a COMPLETE bandwidth HOG compared to cell phones), then if you allocate all of the available bandwidth into a radio/television on demand system, everyone can create their own personal radio station on the Internet and allow anyone to listen to it anywhere on demand. Also, radio spectra is not even digitally compressed.

But George Bush was afraid that if the spectra were to go digital and compression would free a lot of bandwidth, that extra bandwidth would end up somehow serving the public good. So he ensured that everything went digital on HIS terms, on the terms that the top one percent get exclusive unowed privileges of the freed airwaves. Bush did a bad thing, he did so intentionally, he knew what he was doing was wrong.

Re:

err... If I were to request a URL that wasn't playing in my area and there was free bandwidth in my area, the tuner would then broadcast what I wanted to play in my area and list it. / If I were to request a URL that wasn't playing in my area and there was free bandwidth in my area, the transmitter would then broadcast what I wanted to play in my area and list it.